Target is one of America’s largest general merchandise retailers known for selling household goods, groceries, and clothing.
However, if you are a frequent shopper at other retail giants, you may have noticed that Target’s prices are notably higher, especially when compared to Walmart, Costco, Kroger, and other stores. But why is Target so expensive? Here is what I discovered!
10 Reasons Why Target Is So Expensive
1. Size Isn’t Everything At Target
Small stores have become cash cows for Target. Over recent years, the company has consciously reduced the size of stores which now average out at around 40,000 square feet. That’s over 100,000 square feet smaller than prime competitor Walmart.
Target strategically operates smaller stores selling costlier items in densely populated locations such as city blocks and college towns.
Therefore, they are far more reachable to a growing number of urban customers willing to pay higher prices. As a result, Target has experienced more robust financial gain.
2. Target Adapts Price To Location
Another reason Target may be expensive in your area could be due to the company’s use of ‘dynamic pricing.’
For example, Target heavily relies on its thriving eCommerce site, which makes up approximately 18% of its yearly total sales.
Additionally, Target manages an algorithm that implies that people within a 50 ft radius of the store have committed to the sale and therefore are willing to pay more.
Because of this, the cost of items also alters depending on what city, suburb, or community you are in. High-income areas are more likely to receive costlier goods.
3. Target Employees Are Paid More
Unlike its cheaper competitors Walmart and Costco, Target puts its extra earnings into the hourly wage of store employees.
According to Glassdoor, Walmart pays associates $11 an hour while Costco typically pays general assistants $12 hourly.
On the other hand, Target is far more lenient, providing employees with an average of $15 an hour.
Overall, Target employees express a higher level of satisfaction than Walmart employees.
As a result, happy workers are encouraged to provide a better shopping experience for consumers, leading us onto our next point.
4. Receive A Better Shopping Experience At Target
Across the nation, consumers share the universal opinion that Target’s shopping experience is far more excellent than that of Walmart or Dollar General.
Customers can expect to find shelves fully stocked and in order. Moreover, the existing stock appeared to be in better condition.
All in all, Target’s high prices are outshone by the store’s organization and cleanliness which heavily suggests that merchandise is of better quality. Consequently, encouraging the customer to spend more.
5. Target Offers More Contemporary Clothing Lines
Target has managed to find a happy medium between selling fashionable yet affordable garments.
Increasingly, Target offers more contemporary styled outfits that cost under $30, which is lower than the typical price provided by departmental stores.
Additionally, keeping up with fashion trends is another excellent way Target can appeal to urban customers willing to spend a couple of extra dollars on clothing.
6. Target Uses Stores As Fulfillment Centers
Target firmly believes in driving sales through eCommerce. But instead of establishing a network of costly fulfillment centers, Target decided to use stores to facilitate digital sales.
From stores, Target ships home orders, operates a system that allows customers to pick up online orders.
Therefore, Target boosts prices of goods to fund its strong supply chain that eagerly feeds the in-store inventory.
7. Impressive Selection Of Target Goods
One of the main reasons behind Target’s financial success is down to its ability to offer a wide variety of houseware.
As we know, Target aims to attract higher-spending customers and therefore pumps the prices on desirable items such as household furnishing, accessories, and electronics.
Because of this, Target gives the illusion that the products are of better quality than regular discount or dollar stores.
8. Target’s Same Day Delivery Is Easier To Access
Following the rise in consumerism, the latest retail trends indicate that customers are super eager to receive their parcel instantly.
Since Target took the route of transforming their urban stores into mini fulfillment centers, it is now easier than ever to acquire Target’s products the same day you ordered them.
Not only does this boost the number of online shoppers, but it encourages spenders to pay that little extra for goods, knowing they’ll receive them within hours.
For this reason, Target does not hesitate to pump the price on popular items.
9. Target Seizes Every Add On Sale Opportunity
Target gives back what it takes. Or at least that’s how it aims to make the customer feel.
Customers are often greeted by discount bins positioned at the front of Target’s stores filled with goods priced below $5 but typically $1 to $2.
Discount bins let the customer feel that they have already made a saving, encouraging them to spend more than intended in-store. This is one of Target’s most efficient money-making methods.
10. Target Adapts Its Business Model
Target subtly adapts its business model to meet modern demand as a dominant figure in America’s retail landscape. There are plenty of discount retailers in the U.S., therefore.
Target adopts its own niche to boost sales, charging more for desirable items such as clothes and homeware.
The main reason why Target is so expensive is down to the demographic they are targeting. Smaller stores in populated city areas attracted urbanized customers who are naturally willing to pay more than communities in rural areas.
For this reason, Target’s online prices are likely to increase when the site is aware of your physical location.
Additionally, Target stocks shelves in an organized manner to improve the overall shopping experience implying the products are of better quality and therefore worth the money.